According to people familiar with the matter, Qualcomm is ready to turn down the offer, saying it underestimated the company, and Broadcom, which has dominated the smartphone supply chain, has said it will not give up the deal easily. Qualcomm officially announced the proposal to refuse $ 70 per share offer, Broadcom will launch the proxy war.
To buy the world's largest maker of handset chips, Broadcom paid a 28% premium to Qualcomm's closing price on November 2. The deal totaled about $ 130 billion, including $ 25 billion of net debt.
There is no doubt that Wall Street is closely watching how the deal will go. Here's what they think.
Tim Long, Bank of Montreal analyst: "Broadcom management commented that," I believe our common global customer will support the merger. "This means that Broadcom may have been with Apple, Samsung and other major OEM manufacturers Talked about the deal.
T. Michael Walkley, Analyst, Investment Bank of Canada: "We think this combination will create shareholder value through scale up, synergies, etc. In addition, Broadcom is expected to be even more robust given Broadcom's strong relationship with Apple Quickly resolve disputes between Qualcomm and Apple In the future, Qualcomm and Broadcom are expected to accelerate revenue and earnings growth as the market shifts to 5G after the merger.
Mijel Bank analyst Vijay Rakesh: "We think Broadcom may be fancy Qualcomm technology licensing department. Given the transaction requires a very high leverage, Broadcom may be split or sold Qualcomm phone chip Sector, thereby reducing the leverage ratio.We think, in order to acquire Qualcomm, Broadcom needs to retain Qualcomm's cash cow technology licensing department, while retaining the chip division or to sell it to other chip makers.
John Vinh, Capital Markets Analyst at KCB: "We are optimistic about this acquisition because it will bring complementary synergies between handset products and costs and immediately increase earnings per share. We estimate that Qualcomm / NXP Will increase earnings per share by more than $ 13, giving the three companies a combined earnings per share of $ 32 and a fair valuation of $ 465 per share.
Amit Daryanani, RBC Capital Markets Analyst: "Broadcom is one of the most experienced acquirers, so they take the initiative to make an acquisition showing that they saw the deal on its positive side. The transaction, in line with Broadcom's strategy, is expected to be an important catalyst for improving earnings per share and free cash flow. '
According to the data compiled by Bloomberg, at present there are 27 analysts rating Broadcom shares as 'buy' and two as 'hold', none of them are recommended to sell. Their average target price for the next 12 months is $ 291 Qualcomm shares, 10 analysts recommend buying, 16 recommendations 'hold', no one proposed to sell, with an average target price of 61.74 US dollars.